To Tell the Truth

About the Author

Americans shell out more than $2 trillion each
year to keep our federal government running. The least we should
expect in return is honesty.

Alas, Washington officials aren't telling the truth about how much
they've spent, are currently spending or plan to spend. Consider
the omnibus spending bill the Senate will consider later this
month.

The House of Representatives has already passed this measure.
Lawmakers claim it would increase federal discretionary
spending-what congress spends above and beyond what it
must spend on mandatory programs such as Social Security
and Medicare-by "only" 3 percent.

Even that seems excessive. That would be like your family
increasing spending 3 percent after the mortgage and car
payments. Few among us could afford that.

Still, even the 3 percent estimate is deceptive. As my Heritage
Foundation colleague Brian Riedl explained in a recent
study, if the House bill passes the Senate, it would actually
increase discretionary spending by 9 percent -- three times what
lawmakers claim.

That's because lawmakers have used bookkeeping tricks to reach
their 3 percent growth figure.

It started last spring, when they set aside $79.2 billion for the
war in Iraq. A good chunk of that money will be spent this year but
credited to last year's account. That helps lawmakers in two ways:
They get to spend more this year, but since much of the spending
gets credited to last year (even though it didn't happen then),
they can claim year-to-year spending isn't increasing all that
much.

It's sort of like writing a bunch of checks on New Year's Eve-you
get to date them 2003, even though they won't be cashed until 2004.
Your bank balance isn't affected by when the check was written.
What matters is when the check is cashed. And when Congress writes
a bunch of checks, whether for mandatory or "discretionary"
programs, the money all comes out of the same account, made up of
our tax dollars.

Iraqi spending isn't the only accounting shell game lawmakers are
playing. As Riedl put it, "Congress reclassified $2.2 billion of
2004 education spending into the 2003 spending totals. This
reversed last year's decision, when lawmakers interested in keeping
the 2003 budget numbers artificially low had reclassified this
amount into the 2004 spending totals."

These kinds of fancy (some would say slippery) accounting
practices, make it almost impossible to determine how much
lawmakers are actually spending.

When the executives at Enron did something shady, Congress passed
the Sarbanes-Oxley bill. Today, a senior partner at an accounting
firm would be arrested if he tried to boost stock prices with
bookkeeping tricks. Yet, Congress itself is playing accounting
games, pretending the money they are spending has appeared out of
nowhere.

This can't go on forever, of course. Just last month the
non-partisan Congressional Budget Office cautioned that
"substantial reductions in the projected growth of spending or a
sizeable increase in taxes as a share of the economy -- or both --
will probably be necessary to provide a significant likelihood of
fiscal stability in the coming decades."

Of course, we can't afford to start raising taxes. Our economic
models show that doing so would slow the economy and could even
plunge us back into recession. So the only workable solution is to
start cutting spending, and to do so right away.

There's plenty of wasteful spending in the 2004 budget. Lawmakers
could easily trim spending 3 percent this year, instead of
increasing it 9 percent. But first we'd need Congress to show some
honesty in the budget process. Sadly, we can't count on it.